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Petroleum product marketer Meghna Petroleum gained a higher profit in the second quarter of FY24, compared to the same period a year earlier, despite a decline in earnings from its core operations.
On the other hand, Padma Oil saw its income fall in October-December 2023 from the same period of the previous year.
Both the companies' business operations are similar but Meghna Petroleum maintained a growth trajectory only because of its high bank deposits.
Meghna Petroleum
Meghna Petroleum's profit increased by 8.6 per cent to Tk 980 million in Q2 of FY24, riding on its non-operating income of Tk 1.25 billion during the time.
The non-operating income was 37 per cent higher in the quarter, compared to the same quarter of FY23, for interest rate hikes. About 96 per cent of earnings in the segment came from bank deposits, according to the company's financial statement for FY23.
However, state-run Meghna Petroleum's core business has been suffering from weakening demand. It markets lubricants, bitumen, liquefied petroleum gas, and battery water.
In the second quarter of FY24, the organisation earned only Tk 163 million as operating profit, which was 43 per cent lower than the income in the same period a year ago.
Meghna Petroleum is a very good dividend paying stock. It has not paid a cash dividend less than 150 per cent annually for the last 5 years.
However, the latest earnings disclosure failed to attract investors on Monday; the stock closed at Tk 198.60 per share without any movement on the Dhaka bourse.
Its current price to earnings ratio based on the un-audited financial statement stood at 5.68.
Its Relative Strength Index (RSI) stood at 40. The RSI oscillates between zero and 100. Traditionally, the RSI is considered overbought when above 70 and oversold when below 30.
Padma Oil Company
Its profit fell 16 per cent to Tk 686 million in the second quarter of FY24.
The government-owned company markets petroleum products, lubricants, greases, bitumen, and LPG in Bangladesh. It also manufactures and sells agro chemicals products.
In the second quarter of FY24, they earned only Tk 195 million as operating profit which is 17 per cent lower than the same period last year.
The company earned Tk 755 million as non operating income, which is 19 per cent lower than the same period last year.
According to the FY23 financial statement, Padma Oil's 98 percent of its non operating income came from short-term bank deposits. Non-operating income fell because short-term bank deposits were reduced.
Padma Oil has paid a cash dividend of at least 120 per cent for the last 5 years.
Its profit increased by an average 25 per cent for the last three years.
The stock's current price to earnings ratio based on the company's un-audited statement is 5.83, well below the market's ratio of